How People Make Economic Decisions
Craig Nickels
ECO 212
July 26, 2010
Joshua Long

How People Make Economic Decisions “Should I order the lobster or the chicken?” This is a choice a consumer may have when dining at a local restaurant. It also represents a deeper meaning when approached using the principles of economics. Three key economic principles that can be used in decisions people make concerning their time and money are people are rational, they respond to economic incentives, and optimal decisions are made at the margin (Hubbard & O'Brien, 2010). We face economic decisions every day; some may be trivial like the choice between lobster and chicken, and others more seismic in impact on our future. I will explore an economic decision I am currently facing which allows me to examine the marginal costs and benefits, opportunity costs, and possible incentives that could alter my decision. I recently moved to Minneapolis for a fresh start from the doldrums of the Michigan economy. Since April, I have been searching for a job. What started as hope for an immediate career opportunity had slowly diminished to “I just need a job!” After months of submitting my resume to lofty positions, I found myself grounded without a bachelor’s degree and running out of money. I was offered, and accepted, a position at Caribou Coffee for $8.00 per hour. A humbling endeavor, but an endeavor nonetheless. I continued to submit my resume between making lattes and doing homework. I received a call from a recruitment firm for the Target Corporation that had my resume. They informed me that Target wants to interview me for the position of Merchandise Remodel Coordinator that pays $11.50 per hour at their corporate headquarters in downtown Minneapolis. This would be a contract position through January 2011. I have already been offered a store management position with Caribou after three weeks of employment. The constant in this scenario is that I...

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...deep truth about rational decision making. Economists say that a cost is a sunk cost when it has already been committed and cannot be recovered. Because nothing can be done about sunk costs, you can ignore them when making decisions about various aspects of life. Therefore, here our 30$ that we already paid for the lost ticket is sunk cost, so we should ignore it when we are deciding about buying another one.
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Therefore, when buyer lost the ticket, he/she should think marginally and consider opportunity costs when deciding whether to buy another ticket or not. Here the opportunity cost is to lose 10$ more to buy another ticket because we already have 20$ surplus which plus that 10$ is the cost of another ticket. And because we already allocate our time to go there and wait in line to enter the stadium it is better to buy another ticket and enjoy the concert, because the next alternative option is to go home empty handed.
Q-6) how would you use the marginal principal and the concepts of opportunity cost and diminishing returns to help you decide how many hours you should study for your next economics exam?
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DEPENDENCY THEORY: - Economic development theorists over the last few centuries have developed models for explaining the “undeveloped-ness” of countries in the third world countries. From Durkheim to the International Monetary Fund (IMF), we have, time after time, come to witness the rise and fall of development theories and their explanations for the predicament that many poor countries face. Dependency theory has (more so than others) lasted a great deal of time in the framework of the international sphere in terms of presenting a model in which development and “underdevelopment” can be assessed. To understand dependency theory, it is necessary to understand the meaning of dependency. Therefore to this end, Dependency can be defined as an explanation of the economic development of a state in terms of the external influences--political, economic, and cultural--on national development policies (The Journal of Development Studies, Vol. 6, no. 1, October 1969, p. 23).
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...﻿1. What is the ‘economic problem’?
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Sometimes suppliers have issues with shortage and surplus. A shortage is to do with the relationship between the amount the supplier are willing to supply and the given price in a specific time period. On the other hand, surplus is when an amount (such as an amount of goods) that is more than the amount that is needed.
These concepts can be shown in a diagram:
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...Economics Answers
Define the following terms:
1) Public goods are goods that when produced can be freely consumed by anyone, for example the justice system. They are made up of the following goods, non-exclusive and non-rival.
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Non-rival goods or non-exhaustible goods are goods for which marginal cost of its provision to an additional consumer is zero which implies that the ‘allocative efficiency’ price should be zero. A private market is hardly likely to exist in the situations. An example would be defence and law.
Public goods are provisioned by the public sector mainly being funded by tax revenue and are free at the point of use.
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GDP is the economy’s total income accruing from output, the market value of all goods and services produced within an economic area during a certain period.
Positive economic growth signals a wealthier economy and increased prosperity. It means an increase in production which in turn...

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NAME MQONDISI
SURNAME MAGAGULA
STUDENT NUMBER N0128594P
DEPARTMENT INSURANCE AND RISK
NAME OF LECTURER MR MACHOKOTO
COURSE CODE PRINCIPLES OF ECONOICS (CBA 1104)
ASSIGMENT 1
DUE DATE 30 SEPTEMBER 2013
Mixed economy is the hybrid of free market and command economy. In mixed economy both the private and public sector need to co-exist to overcome the weakness of one another. Most countries practice mixed economy for a number of reasons as mentioned below.
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...Consumer expenditure Mini Case
John Hawksworth “Opinion: Economic Trends - Saved by the consumer?”, Accountancy, London, Mar 2002 (with minor editing)
How long can the UK economy buck the global trend just because our consumers keep spending money? Have we avoided the recession that has gripped the US, Japan and Germany over the past six to 12 months or are we just postponing the day of reckoning? And are we storing up worse problems for the future as a result of rising household debt levels and a widening trade deficit?
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Average earnings have moderated slightly but should still rise by an...